The first batch of steel delivered for the construction of New York City’s Freedom Tower, a building designed to embody America’s shared values and national recovery from a gut-wrenching tragedy, arrived, naturally, from Luxembourg.
By that point, nearly 20 years ago, the use of foreign steel for big projects was relatively common in a country where domestic manufacturing had started to decline in the 1970s.
The US now produces about 40% less steel than it did a half-century ago. Yet, it’s just announced plans to hit the large quantities of steel that it imports with costly tariffs.
The move is further proof that a relatively simple alloy of iron and carbon, widely mastered in the 19th century, can still capture the imagination of the wealthiest and most technologically advanced nations.
Steel is an indicator – a measure of how actively a country is churning out new bridges, buildings, railways, and cars, or how much it has settled into comfortable affluence.
More than that, this humble metal can also be an object of wistful nostalgia. An economy in its development heyday revs up the domestic steelmaking required to feed its ambitions. An economy in search of a new chapter can keep making steel, it’s just likely to sell much of it to other places focused on their own advancement.
US steel production declined sharply in the 1970s.Image: World Economic Forum/FRED
Security is also a factor. The “new” US steel tariffs, which are both paired with levies on aluminum and a reinstatement of something President Donald Trump enacted during his first term, have been justified by a perpetual need to “meet demand for national defence.” That kind of perspective could make the geographically diverse nature of steel production seem problematic.
Luxembourg happens to be home to one of the biggest steel companies in the world, as are Japan, South Korea, and India. And then there’s China; its ability to meet global steel demand with lower-cost alternatives has been cited as a primary reason for the US tariffs.
Much like the US decades before it, China has been in the midst of a boom in steel production and corresponding domestic consumption. The recent slowing of growth in China, however, has resulted in more of its steel being exported (it shipped out nearly three times the amount of the next-biggest exporter in 2023, and followed that with a 23% increase in exports last year).
But China isn’t among the top direct steel exporters to the US. Instead, the bulk of US imports come from traditionally close trading partners including Canada and Mexico. That’s one source of criticism of the new tariffs. Another is their potential impact on the broader US economy.
According to a report published in 2023, the steel tariffs that Trump enacted in 2018 boosted domestic production and succeeded in pushing the industry’s “capacity utilization” to a 14-year high; they also increased the price of steel by 166%, which hurt domestic companies that use large quantities of it, such as carmakers.
A callback to a better time
Steel holds an iconic place in American history.
The population of Johnstown, Pennsylvania increased nearly sixfold between 1852 and 1890, as a local forerunner of US Steel churned out rails for an expanding railroad network. By the 1940s, Pittsburgh-based US Steel employed more than 340,000 people, and steelmaking was a firmly established pillar of Pennsylvania’s economy (a less-beneficial aspect: dark soot occasionally covering laundry left to dry outside on clotheslines, and impacting people's health).
Pennsylvania’s industry had been built by larger-than-life figures like Henry Clay Frick – who supplied the coke it required, and whose publicly accessible art collection in New York City includes a gritty depiction of a 19th-century forge painted by Goya.
As steelmaking technology and methods advanced, the US didn’t always replace its ageing blast furnaces with new facilities. Global demand faltered in the 1970s, as more countries were becoming viable competitors. By the eve of the 2024 US presidential election won by Trump, which hinged to a large degree on Pennsylvania, the number of people in the state directly employed to manufacture steel had dwindled to about 31,000.
Meanwhile, as in other relatively wealthy countries, apparent steel use per capita in the US has flatlined. Maybe that shouldn't be surprising. Demand for metals is widely believed to plateau once a nation's GDP per capita reaches $15,000. The US passed this mark in 1983. China seems poised to pass it soon.
Some countries use a lot more steel than others.Image: World Economic Forum/WSA
That doesn’t mean we all won’t need steel anymore. US Steel may not be what it once was, but it still drew a nearly $15 billion acquisition offer from Japan’s Nippon Steel (Trump has suggested Nippon may invest in the storied American company, rather than buy it outright).
Steelmaking is also becoming cleaner. The use of lower-emission electric arc furnaces is rising. Nippon Steel has said the technology will play a role in its bid to become carbon neutral by 2050.
It may be getting greener, but steel remains a potent political symbol – a callback to a better time, and way to encourage people to believe in more secure days yet to come. Building the data centres necessary to store the nebulous digital economy of the future will still require the low-tech metal.
So far, one thing seems certain about the planned US steel tariffs: retaliation from other countries.
To make this a worthwhile exercise in supercharging domestic production, it would be ideal to follow through with some forward-looking applications. There are plenty of good potential uses for supplementary steel, in addition to data centres.
One might be to subsidize its role in building new housing, and help address a chronic shortage. Or turn it into the kind of factories and machinery needed for clean-energy infrastructure; according to one estimate, we’ll need about 2 billion metric tons of steel for additional infrastructure over the next few decades.
Any foundational industrial initiative requires a government to step in. The question is whether to do that by erecting artificial barriers around a legacy industry, or by incentivizing the growth of others that make sense for the future.
Weforum